International Economic Law and Policy Blog

The Auto Bailout: The Other Subsidies

Most of the recent auto bailout focus has been on subsidies requested by the Big Three.  But there is also the matter of the state tax incentives given to foreign automakers to set up factories there: 

The United Auto Workers Union boss [Ron Gettelfinger] also hit out at those US States that have welcomed foreign-owned, non-unionised, transplant car factories with generous incentives. "Since 1992, states with transplants have spent over $3 billion in incentives," he said. "In Alabama, Hyundai has received $252.8 million, Toyota has received $29 million, Honda $158 million and Mercedes-Benz $258 million." He also said that Alabama's further incentives, such as training Mercedes workers, agreeing to buy Mercedes vehicles and clearing the proposed factory, amounted to a further subsidy of about $175,000 per worker.

With regard to how international trade rules apply here, one big hurdle would be finding someone to challenge these subsidies, given that so many foreign-owned companies are benefitting (or might benefit in the future).

As for a dormant commerce clause challenge, I've always been convinced there are some good arguments to be made, but the chances of success for such a claim are not clear.  I was hoping the Cuno case would resolve the issue, but it was thrown out by the Supreme Court on standing grounds, and I haven't heard of similar cases in the pipeline.

Two Canadian Views of North American Integration

Anne McLellan of the University of Alberta:

... the treaty needs a revamp, she says, and should be expanded. The transition period where the three countries were losing jobs to each other is long over, and trade between the U.S. and Canada reached over a trillion dollars last year. Other trading blocks like India and China pose the real threat to jobs, and in order to be competitive with them, NAFTA must be expanded.

“We will either become three independent countries foraging for ourselves,” she says, “or we take NAFTA, with its faults, and we have the creativity and courage to say that there is something special about these three countries, that we have enough in common that, yes, is about trade, but is also about shared values.”

Elizabeth May of the Green Party:

May agrees that the trade agreement needs to be renegotiated, but far from wanting to expand it, May would scale back controversial sections like Chapter 11, which she says gives corporations too many rights.

“Canada has lost out,” she says, “sometimes in cases with millions of dollars at stake, for doing things that normally are within the jurisdiction of a Canadian government to do.”

See http://www.seemagazine.com/article/news/news-main/debate1127/

The U.S. political climate right now seems to favor scaling back rather than expanding, but if there is an initiative to open up NAFTA and re-think it, it's hard to know where this might lead.  There may be a bit of both, with expansion in some areas and scaling back in others.

The Auto Bailout: What People Are Worried About

There are a lot of subsidies for the auto industry being proposed, and in response many concerns about these subsidies have been noted.  In terms of trade issues, most of these concerns are unlikely to turn into formal complaints.  Rather, as noted previously here, they are probably just being put out there to make sure the measures taken are not blatantly discriminatory.  For example, a measure like this, which involves a clear GATT Article III:4 violation:

the Consumer and Automotive Recovery (CAR) Act of 2008 ... would provide a $1,500 tax credit to those with incomes less than $250,000 a year if they buy a new car that is substantially manufactured in the United States. (emphasis added)

This is from a Texas Congressman.  Here's the bill.

WTO Scholars' Forum: WTO Dispute Compliance

Professor Mary Footer

(University of Nottingham)

‘Compliance with WTO Dispute Settlement Decisions: Some Reflections on Recent Developments’

Wednesday 3 December 2008, 4-5.30pm, UCL Laws, Moot Court

To register free of charge please contact Forum administrator, Ann Tucker, [email protected]

Summary

While it is understood that WTO Members will sooner or later bring themselves into conformity with decisions of the WTO Dispute Settlement Body, in practice this does not always happen or, if it does, then it happens only belatedly. The aim of this talk is to discuss recent developments in the field of compliance with WTO dispute settlement decisions. Special consideration will be given to those cases where compliance is long overdue, or has come about in a manner that is not provided for under the DSU and to suggest reasons for such non-compliance.

 

Location

UCL, Faculty of Laws, Bentham House, Endsleigh Gardens, London WC1H 0EG (map: http://www.ucl.ac.uk/laws/faculty/index.shtml?laws_map)

About the WTO Scholars’ Forum and its events:

The WTO Scholars’ Forum was set up in September 2006 by Dr Fiona Smith (UCL) as a new initiative designed to bring together experts from both academia and legal practice to discuss current aspects of the law and practice of the World Trade Organization (WTO). In 2007, Dr Isabelle Van Damme (University of Cambridge) joined the forum as Co-Director.

Currently there are many academics and practitioners who have an interest in WTO law and several events organised under the auspices of individual London colleges, Chatham House, as well as the British Institute for International and Comparative Law, as well as exciting initiatives organised outside London. However, there is little year-long sustained activity which capitalizes on all the interest and knowledge. The WTO Scholars’ Forum draws together all this expertise by holding a series of activities. The Forum is also open to PhD students and it encourages them attend the activities and give papers as part of the seminar series.

For more about the WTO Scholars’ Forum see the website: http://www.ucl.ac.uk/laws/wto-forum/index.shtml or contact Dr Fiona Smith ([email protected]) or Dr Isabelle Van Damme ([email protected])

European Respect for WTO Law

In the Wall Street Journal, Jack Goldsmith and Eric Posner ask, "Does Europe Believe in International Law?"  Their answer:  "Europe's commitment to international law is largely rhetorical. Like the Bush administration, Europeans obey international law when it advances their interests and discard it when it does not."  The authors cite a number of examples, but of course I focused on what they say about the WTO:

Europe also has violated international trade laws when public sentiment gets riled up -- for example, in resisting importation of genetically modified foods, or beef from cattle raised with growth hormones. European countries defied adverse World Trade Organization (WTO) rulings in both cases.

European countries have violated WTO law by granting trade preferences to certain banana-exporting nations with which they have strategic relationships;

It could be argued that Goldsmith and Posner have overstated their point a bit.  It's not as though the Europeans have intentionally violated WTO rules in the GMOs, Hormones and Bananas cases.  In defending their measures, they had some decent arguments as to why the measures were in compliance with WTO rules.  And after the measures were found to be in violation, the Europeans took action to bring them into compliance.  Of course, it may be true that some of the European actions in these cases do not offer an exemplary model of WTO compliance.  But the way the article presents the situation, it sounds as if the Europeans were thumbing their nose at WTO law, and I'm not sure that is a completely accurate characterization.  As a final point, an analysis of European compliance with all adverse WTO rulings Europe has faced might provide a better assessment of this issue than picking the notorious few where compliance was contentious.

Obama Takes on Farm Subsidies

Well, a portion of them, anyway.  From a speech he gave today:

We will go through our federal budget -- page by page, line by line -- eliminating those programs we don’t need, and insisting that those we do operate in a sensible cost-effective way.

Let me give you one example of what I’m talking about. There’s a report today that from 2003 to 2006, millionaire farmers received $49 million in crop subsidies even though they were earning more than the $2.5 million cutoff for such subsidies. If this is true, it is a prime example of the kind of waste I intend to end as President.

The figures come from a recent GAO report.

It's a small step, but a step nonetheless.

Reminder: Call for Papers - ASIL IEL Interest Group Research Colloquium - UCLA, Feb. 13, 2009

In case you missed previous announcements, or have otherwise any hesitations about submission, I would like to again bring to your attention the ASIL IEL Interest Group Research Colloquium that will be held at UCLA on February 13, 2009. This will be a non-thematic, one day academic workshop in which unpublished papers selected on a double-blind basis by the conference committee (headed by Prof. Richard Steinberg of UCLA) will be presented and discussed. This is a great opportunity for scholars, both young and established, to have their current work - including works in progress -debated in an informal academic environment. More details are in the call for papers (Download ucla_call_for_papers.pdf ), and we encourage all researchers engaged in any field of international economic law to submit proposals within the December 8, 2008 deadline.

T. 

Posted by Tomer Broude

T. 

What Kind of USTR Do We Want?

Politico reports on the Obama administration's possible choices for U.S. Trade Rep.  The article distinguishes between a "technocrat" choice and a "political" choice, indicating that the business community prefers the latter.  The technocrat options mentioned are Dan Tarullo of Georgetown Law Center and Lael Brainard of Brookings.  The political options mentioned are Bill Richardson, who seems set to become Commerce Secretary, Rep. Adam Smith (D-Wash.) and former Rep. Jim Davis (D-Fla.).

The reason business folks support a political pick is explained as follows:

A Tarullo pick, trade advocates fear, would signal a less-than-ambitious trade policy. Tarullo served in a variety of senior economic positions in the Clinton years, but he lacks the gravitas and strong political connections on Capitol Hill that trade lobbyists say are necessary to push forward significant trade deals.

And along the same lines:

“The question is whether [Obama] goes for a political person, which would mean a more active director of trade policy, or he goes for a technocrat,” which would signal few new initiatives but rather a quiet hand that would “keep the boat going,” said Gary Hufbauer, an economist with the Peterson Institute for International Economics.

Is this right?  Is the most important qualification the ability to sell these trade deals to Congress?  I don't have much experience in trade politics, so I'm tempted to accept the conventional wisdom here.  At the same time, though, there is a part of me (the naive part?) that thinks what we really need is someone with a vision of how trade rules could be reshaped in a way that increases support for free trade and trade agreements.

 

 

Beggar thy neighbour: automobile industry

From Bryan Mercurio:

Following earlier posts on the US auto industry bailout and EU response, it seems appropriate to post on the Chinese response.

The South China Morning Post reports (in a password protected article dating from 20 November, ‘Industry seeks government help as sales slump: Chinese carmakers press for bailout’) that the Chinese automobile industry has asked the government for ‘emergency measures’, including ‘lower taxes on new cars, lower fuel prices and increased grants for research into hybrid cars and new technology’. The reason cited for the request is the US loans to the American industry as well as falling sales within China and in major export markets (eastern Europe, Southeast Asia, Africa and Latin America ).

One executive is quoted as saying, ‘The Chinese government will undoubtedly support us’, and notes that state-owned Chinese banks have already become more willing to lend to Chinese carmakers.

Next in line... Korea, Japan , …

See also: http://money.cnn.com/2008/11/19/news/international/chinese_auto.ap/index.htm

Blog Comments

Typepad has come up with some improved commenting features.  One of these is threaded discussions, which is something we've wanted for a long time.  It's just a beta version, so it may have some bugs in it, but I installed it anyway.  Check it out all you commenters and let me know if you come across any problems.

More on Auto Trade Tensions

Bloomberg has a good overview of the issues here.  One part that struck me was the following:

German Chancellor Angela Merkel said her government will decide on an aid request from GM's Opel unit by Christmas. Opel asked for ``somewhat more than'' 1 billion euros in credit guarantees, said Carl-Peter Forster, GM's Europe chief. The state government in Hesse, where Opel employs 15,000 people, agreed to give the company and regional parts suppliers loan guarantees of as much as 500 million euros.

So it appears that Germany may give subsidies to GM's European subsidiary.  By contrast, I have not heard any suggestion that U.S. bailout money would go to the U.S. operations of foreign car-makers.  Is the fact that these foreign car-makers don't need a bailout sufficient to make the situations un-"like" and thus justify different treatment?  (Not in a GATT Article III sense, just speaking generally).

Daewoo in Madagascar

There’s a fascinating article in the FT today about Daewoo’s plans to acquire half the arable land in Madagascar:

Daewoo to pay nothing for vast land acquisition

By Song Jung-a and Christian Oliver in Seoul and Tom,Burgis in Johannesburg

Published: November 20 2008 02:00 | Last updated: November 20 2008 02:00

Daewoo Logistics of South Korea said it expected to pay nothing to farm maize and palm oil in an area of Madagascar half the size of Belgium, increasing concerns about the largest farmland investment of this kind.

The Indian Ocean island will simply gain employment opportunities from Daewoo's 99-year lease of 1.3m hectares, officials at the company said. They emphasised that the aim of the investment was to boost Seoul's food security.

An editorial in the FT expresses strong concern:

Pirates are not the only source of concern off the African coast. The deal South Korea’s Daewoo Logistics is negotiating with the Madagascan government looks rapacious. Alas, it is but the latest brazen example of a wider phenomenon. In the name of food or energy security, cash-rich states are seeking to buy up natural resources in poor countries. While foreign capital and technology should be welcomed by countries with surplus resources, the terms and scale of the present deal raise serious questions.

Any agreement must ultimately be in the interest of the local population. The Madagascan case looks positively neo-colonial. If the deal is sealed with the vague promises by Daewoo Logistics being mooted, the Madagascan people stand to lose half of their arable land.

Market Access for Small, Developing Countries

Following-up on this old post, apparently the WTO can work for the little guy:

Fiji Kava Council chairman, Ratu Josateki Nawalowalo said the removal of the restriction on kava trade in European countries was a result of a 10-day roundtable consultation between Pacific Island ambassadors, European Commission leaders based in Brussels and the German Government Authorities in Berlin.

Kava trade had been restricted in the European countries since 2002.

...

"We also acquired legal advice from European lawyers Frantino Vergano, under our funding facilities by TradeCom, which confirmed our legitimate rights to seek WTO intervention and involvement. Fiji desperately needs to promote kava as an alternative to the sugar industry in EU and will be the answer to our economic plight," he added.

And it seems that this will have a big impact:

Fiji was earning close to $100 million per annum since 1998 prior to the ban while in 2003 IKEC registered a combined claim of 'loss of revenue' of around $US200 million per annum for the Pacific Island producers.

This is certainly good news for Fiji.  The linked article provides a bit of explanation, but this could make for a very good case study, if someone wants to do further research, of how a small, developing country can use trade rules to open markets.

The NAFTA Renegotiation

After all the NAFTA-bashing during the Presidential campaign, I've been very interested in seeing what exactly President-Elect Obama has planned for NAFTA.  This may be a first glimpse:

After he becomes president in January, Obama will order a study on the world’s largest trade agreement, then seek longer- term negotiations with Mexico and Canada on how to change it, according to three advisers, who spoke on condition that they not be identified.

This seems like a sensible approach.  Having promised to do something about NAFTA, he can't just ignore it.  On the other hand, using the "hammer" of the opt-out, as he referred to during the campaign, would probably not be the best approach diplomatically.  Doing a study of the issue first, then taking a long-term approach, sounds reasonable.  Ultimately, it may be that the Obama team only requests minor tweaks, for example to the labor and environment provisions, so as to bring NAFTA in line with the current FTA model.

 

News from the Society of International Economic Law

The SIEL's November 2008 E-Newsletter (including the new officers and executive council) can be found at http://www.sielnet.org/Default.aspx?pageId=67692

Also of note is that it has been decided that the next global SIEL conference will take place in 2010.  A Request for Proposals (“RFPs”) to host the event will be going out in the New Year.  That  RFP will provide the specific criteria we would want to see in any such proposals.

 

For 2009 we have decided to focus on regional events.  You will hear more about those events in the coming months (locations, formats, call for papers, etc).

 

Dani Rodrik Rejects Protection (at Least in Today's Economic Climate)

It has never been very clear to me what Dani Rodrik thinks of protection, so I was excited to hear him say this:

At a time when the world is digging deeper into recession, exporting your problems through trade protection is the last thing that any responsible country should be doing.

The context of his post was the Ha-Joon Chang op-ed discussed earlier and two recent economics articles about the efficacy of tariff protection.

WTO Scholars Forum Event in London

A new WTO Scholars Forum Event:

Professor Geert Van Calster

(University of Leuven, Institute for Environmental and Energy Law)

‘TLC – Trade and the Low Carbon Economy’

Chair: Mr Angus Johnston (Senior University Lecturer, University of Cambridge)

Thursday 20 November 2008, 5-6.30pm, UCL Laws, London, Room SR1

(http://www.ucl.ac.uk/laws/faculty/index.shtml?laws_map)

All welcome, free of charge

For further information, please contact Forum administrator, Ann Tucker, [email protected]

Bio:

Geert van Calster is a professor of regulatory law at KU Leuven, a former visiting lecturer at Oxford Univeristy (2006-08) and former visiting professor of WTO law at Erasmus University (Rotterdam) and of EU law at Monash University (Melbourne). He is the director of studies of KU Leuven's Master of Energy and Environmental Law, and practises law with the Brussels and London offices of DLA Piper. His current research interests include climate change law, and the regulation of new technologies, nanotechnologies in particular.

Summary:

Government and private measures intended to move towards a low carbon economy have created some interesting contrasts. Many, including regulators, see a trading instrument (emissions trading) as something of a panacea for climate change mitigation. At the same time, alternative measures suggest a decrease in trade so as to keep carbon footprints of goods and services down. While usually well-intended, such measures inherently erode some of the comparative advantages of developing countries. Buying locally, for instance, sometimes descends into protectionism. This presentation will present the impact of the WTO on low carbon economy measures, highlighting the limitations of WTO law in the international debate on climate change, but perhaps even more so the agility of the agreements to support genuine climate change governance. It will also look at the ‘special place’ for energy in the WTO.

The Directors of the WTO Scholars' Forum

http://www.ucl.ac.uk/laws/wto-forum/index.shtml?events_new

The G-20 on Protectionism

From the G-20 statement:

13. We underscore the critical importance of rejecting protectionism and not turning inward in times of financial uncertainty. In this regard, within the next 12 months, we will refrain from raising new barriers to investment or to trade in goods and services, imposing new export restrictions, or implementing World Trade Organization (WTO) inconsistent measures to stimulate exports. Further, we shall strive to reach agreement this year on modalities that leads to a successful conclusion to the WTO’s Doha Development Agenda with an ambitious and balanced outcome. We instruct our Trade Ministers to achieve this objective and stand ready to assist directly, as necessary. We also agree that our countries have the largest stake in the global trading system and therefore each must make the positive contributions necessary to achieve such an outcome.

This sounds like an important commitment.  However, keep in mind that we don't know what President-Elect Obama thinks of all this:

For now, little is known about what Obama, not to mention his as-yet-to-be-named Treasury Secretary and other economic advisors, thinks about the actions and general principles that won support at the summit. While Obama generally has backed greater transparency and disclosure and a tightening up of financial-services regulation, he and his economic advisors have been very quiet about the specifics under discussion at the summit. "He's played things very close to the vest," says Rogoff. "I suspect they don't even know themselves" what positions they'd take.

Bush Administration officials say there were extensive briefings and consultation with the Obama team in the runup to the G-20 meetings, but they gave no indication that Obama's views may have influenced the positions they took or where there might have been divergence. And the many visiting delegations that met with Obama's representatives, former Secretary of State Madeline Albright and former congressman Jim Leach, on the outskirts of the meeting got little more in the way of specifics. "They were very much in listening mode, absorbing others' views," says one European diplomat. "They gave little away." And until they do, it will be impossible to determine just what concrete regulatory or other changes will come of President Bush's last big international act.

Would Obama agree to "refrain from" the WTO violations mentioned and "strive to" finish the Doha negotiations?

AB Member Baptista

Sad news from the Appellate Body:

The head of the World Trade Organisation's (WTO) top court, Brazilian lawyer Luiz Olavo Baptista, has resigned for health reasons, a senior WTO diplomat said on Friday.

Best wishes to Professor Baptista.

This means the AB Member selection process will start again.

 

G-20 on the Bicycle

This from today's WSJ:

The leaders embraced a renewed effort to unblock global trade talks and promised they will refrain from using commercial barriers to protect their own industries for the next 12 months. "We agreed on the importance of rejecting protectionism," Mr. Brown said. "It is the first time that a meeting of world leaders has instructed ministers to come to an agreement and I think we will see an agreement in the next few weeks."

It will be interesting to see whether the financial crisis, and the fear of Great-Depression-type protectionism, will get the Doha Round back on its bicycle.  Recall that the bicycle theory of trade negotiations is that if you stop, you fall down--in the form of a protectionist race to the bottom.

China – Financial Information Services: Dispute Settled

We had a good discussion on this blog about this case a year ago before the dispute was formally launched. See No News is Bad News at the WTO?  The U.S. and EU filed their WTO complaints in March 2008, and Canada joined them in June 2008.

Now the case is settled. China signed an agreement with the three complainants on November 13. See USTR announcement and FT report. What is amazing about the settlement is how completely China has agreed to accommodate the requests of the complainants. First, China has agreed to repeal the restrictions imposed by its 2006 Regulation on direct supply of financial news in China by foreign news agencies, which was the trigger of this dispute. Second, foreign news agencies will be allowed to set up local operations, i.e., branches or subsidiaries, in China, which is a major breakthrough since foreign investment in news services has never been allowed under China's investment law. Third, China will designate an independent regulator in the news service sector that will not have conflicts of interests with the companies it regulates. This means that the official Xinhua News Agency will no longer have the regulatory power in the news industry, another major breakthrough in the Chinese system. China agreed to implement all these measures by June 1, 2009.

Considering how politically sensitive the news sector is to the Chinese government, the concessions are truly remarkable. But why did China agree to these terms? I am sure there are various political and economic considerations in the play, including the demand of Chinese users for quick financial information in today's financial crisis, and China's visible ascent in the international financial order. But legal considerations sure also played a role. China may have realized that it does not have a strong case given the thinly disguised protectionist motive behind the 2006 Regulation.

Ironically, as we discussed a year ago, the interpretation of China's GATS schedule, the key and threshold issue in this case, could be very tricky. And it is not at all clear whether China's concession on the provision of financial information includes financial news services provided by foreign news agencies. China argued that it has never intended to open its market in the news sector. It is very likely that when China negotiated its GATS schedule on the provision of financial information, it had only financial institutions in mind and did not consider financial information provided by news agencies. But in light of US-Gambling, China could not feel confident about the chance of winning on the interpretation of its schedule.

In sum, China may have conceded much more in the settlement of this case than it originally intended in the WTO accession. Despite the uncertainty in the legal technicality of this dispute, it is all in all very impressive what the WTO dispute settlement mechanism can achieve in pushing major changes in a member's domestic system, and in this case, in the right direction. 

  

"Forward-Looking Protectionism"

Via Jonathan Dingel, I see that Ha-Joon Chang is making the case for "forward-looking protectionism in the US."  A key sentence:

Mr Obama should use protectionism in a similarly forward-looking way. Industries that can be revived through re-tooling of its factories and re-training of its workers should be given protection, but only if they fulfill certain conditions regarding investment and training.

Jonathan offers some good criticisms, but I'll add one more point.  The U.S. is not the only country in the world.  If the U.S. protects industries so they can re-tool, presumably the rest of the world will do the same in response.  If that happens, and we see the rise of competitive protectionist measures, will the world as a whole really be better off?  Maybe a few will come out ahead, but overall that sounds like a downward spiral to me.

Chang also says:

Mr Obama should take a lead in creating a world trading system that allows asymmetric protectionism between the rich countries and the poor countries, with the latter protecting their markets more and gradually opening up in line with their economic development.

On this issue, I would say that I'm not sure Obama needs to create such a system.  That's what we already have.

The Auto Bailout and Trade Tensions

It appears that the multi-billion dollar aid package that will likely be given to the U.S. auto industry has not gone unnoticed by our trading partners:

"We will look very carefully at the details of the proposed aid package to the U.S. auto industry, in order to ensure compliance with international trade rules and assess the potential impact which it may have on trading partners," said Peter Power, trade spokesman for the European Commission, the E.U.'s executive arm. 

(http://money.cnn.com/news/newsfeeds/articles/djf500/200811140622DOWJONESDJONLINE000418_FORTUNE5.htm)

And:

"We are in the process of analysing the plan. The plan has not yet been presented yet. Of course, if it is illegal state aid, we will act at a WTO level," Barroso told Europe 1 radio.

"In any case, we are in the process of preparing a (European) plan that is not discriminatory. It is a plan that supports cleaner, more environmentally-friendly cars," he added.

(http://www.reuters.com/article/marketsNews/idUSLE47953820081114)

Proving a violation here will not be that easy, though.  There's the possibility of an "adverse effects" challenge, but that would have to wait until there are some adverse effects.  In addition, there may be some restrictions on which companies are eligible (described here), with foreign producers that have factories in the U.S. excluded.

It may be that the EU statements are simply designed to discourage the U.S. from inserting other discriminatory provisions into the aid package.

The WTO and the financial crisis: excluding civil society?

From Rob Howse:

According to the WTO website there was recently a meeting of "experts" dealing with the difficulties of trade finance in the current environment.  Here is the link:  http://www.wto.org/english/news_e/news08_e/trade_finance_12nov08_e.htm

You will note the complete absence of civil society representatives, although the for-profit private sector is represented by such giants as Citigroup, JP Morgan Chase and ING. 

Is the WTO back to excluding civil society on the grounds that  they are not "experts"?  Of course this is preposterous given the contribution that civil society organizations have made to debates about debt and development financing, which are, obviously, central to the problem of trade financing.   I should add that alternative financing institutions such as microfinancing entities also seem not properly represented, as if they had no legitimate stake in this question.

Of course, it is possible -- though would be very strange -- that civil society were invited but decided en masse not to attend.   So it is a little too soon to make a judgment.  But  at this point it looks very bad indeed for the WTO.

Rob Howse

Asian Society of International Law Second Biennial Conference

The Asian Society of International Law, which was inaugurated in April 2007, is going to hold its second biennial Conference in Tokyo on 1-2 August 2009. It started Call for Panels/Papers. Please refer to its website for further information: http://www.asiansil-tokyo2009.com

Clarify versus Interpret

In a communication related to the AB's Hormones Suspension decisions, the U.S. says:

3. Accordingly it is clear that the Appellate Body can clarify, but not interpret or amend, any of the covered agreements, including the DSU.

Putting aside "amend," it is not very clear to me what the difference is between "clarify" and "interpret," especially given that DSU Article 3.2 refers to "clarify[ing] the existing provisions of those agreements in accordance with customary rules of interpretation of public international law." (emphasis added)  What exactly is "clarifying" under DSU Article 3.2 and how does it relate to "interpreting" under WTO Agreement Aricle IX:2?  On this point, take a look at this statement by the AB at para. 161 of U.S. - Stainless Steel (Mexico):

Clarification, as envisaged in Article 3.2 of the DSU, elucidates the scope and meaning of the provisions of the covered agreements in accordance with customary rules of interpretation of public international law.

That definition of "clarification" sounds a lot like the definition of "interpret."  From the New Shorter Oxford English Dictionary:  "To explain the meaning of."  (I don't have the dictionary on me right now to double-check, but that's from an old article I wrote.  Here's the same definition from an online dictinonary: http://www.thefreedictionary.com/interpret.  That same dictionary defines "clarify" as "To make clear or easier to understand; elucidate.")

I can understand the U.S. concern, but without more guidance in the DSU as to the proper scope of the AB's role, it is very difficult, in my view, for the AB to know just how much "clarifying" it may do before it has crossed over into "interpreting."

Government Ownership of the Auto Companies

AP reports:

Congressional Democrats are pushing legislation to send $25 billion in emergency loans to the beleaguered auto industry in exchange for a government ownership stake in the Big Three car companies.

Here's what I wonder:  Will this make them "state enterprises" subject to GATT Article XVII?  How much of a government ownership stake is required under the provision?   And what's the significance of Article XVII's title referring to "State Trading Enterprises"?  Are the car manufacturers "trading enterprises"?  If there are any Article XVII experts out there, feel free to offer your thoughts.

Panels, the AB, and the Role of Precedent

From the recent EC appeal in the Continued Zeroing (DS350) case:

First, if the Panel Report is construed as finding that a panel can invoke "cogent reasons" for departing from previous Appellate Body findings on the same issue of legal interpretation (paragraphs 7.180 and 7.182 of the Panel Report), then the European Communities requests the Appellate Body to modify or reverse those findings and complete the analysis, for all the reasons set out by the Appellate Body in its report in US – Stainless Steel from Mexico.  The European Communities considers that a panel may invoke "cogent reasons" in order to depart from previous panel findings; but only the Appellate Body can invoke "cogent reasons" in order to depart from previous Appellate Body findings. (emphasis added)

I'd love to hear what the Appellate Body has to say on this point.  Unfortunately, it was part of a "conditional appeal," and it's rare that the Appellate Body rules on those.  My guess is they will not be eager to address it here.

Conference on "Fuel Rules - Energy and the WTO"

Details here:

Don't miss this opportunity to learn about the latest issues on international trade in energy products and services, and how the WTO regulates such activities. Topics include:

 

·          An overview of the international legal regimes applicable to trade in energy products and services, with a particular focus on the WTO and the Energy Charter Treaty.

·          The use of regional trade agreements to secure energy supplies

·          How international trade rules will need to be adapted in order to achieve global climate change goals

·          Disciplining government involvement in the energy sector through the use of international trade rules, with a particular focus on subsidies in the biofuels sector

·          Whether and how current international trade rules can limit cartel arrangements in energy trade

·          An analysis of existing mechanisms for the settlement of international disputes in the energy sector, and suggestions for improvement

It is put on by the IBA and will be held Feb 12-13, 2009 in Geneva.

Sounds like they may have something to say about one of my favorite topics, OPEC and the WTO.

The State of the Doha Round

I've heard some talk about pushing forward with the Doha Round, so as to have it close to done by the time Obama takes office.  However, based on the following two articles from today, it seems to me that not much has changed  Compare this:

French Foreign Trade Minister Anne-Marie Idrac said Monday she doesn't believe there is any chance of making headway on stalled world-trade talks before the end of the year.

http://news.alibaba.com/article/detail/europe/100021660-1-french-trade-min-doesn%2527t-see.html

To this:

A deal on the Doha round of trade talks could be reached within weeks and a summit of industrial and emerging countries this weekend must send a clear signal to achieve this, the EU's top trade official said.

"With leadership and determination, a Doha deal is within our grasp as the details of a final agreement could be agreed within weeks," European Trade Commissioner Catherine Ashton said after meeting her U.S. counterpart Susan Schwab on Tuesday.

http://www.guardian.co.uk/business/feedarticle/8012551